Nasdaq’s head of global listing Karen Snow has fired a warning shot at the Square Mile in a BBC Radio 4 interview, telling interviewers that she “absolutely” believes that the trend of British businesses snubbing the London capital markets in favour of the US will continue.
"We're having a lot of conversations with companies about listing in the US. We get a lot of inbound calls (from the UK) and we also make sure we're in front of the right CEOs," she said.
Snow’s comments come after she helped orchestrate British semiconductor giant Arm Holdings PLC (NASDAQ:ARM)’s Nasdaq listing, in what was a massive blow to the confidence of the London Stock Exchange.
Snow added that Nasdaq is hard at work luring more UK-listed firms across the pond.
London has witnessed a raft of high-profile delistings in 2023, with the likes of Flutter Entertainment PLC (LSE:FLTR) and Kingspan Group dropping off the London Stock Exchange and TUI AG (LSE:TUI) also mulling a delisting.
Education giant Pearson may be the next big cap to make the move after its largest shareholder Cevian Capital urged the FTSE 100 constituent to delist from the London Stock Exchange in favour of a US listing.
Cevian’s managing partner Christer Gardell encouraged the move as “an easy and effortless way to increase the value of a company”.
Only 56 companies have applied to list on the LSE's main market in 2023, a stark contrast to the average of 112 companies annually between 2018 and 2022.
Out of these applications, only 30 have been approved by the Financial Conduct Authority (FCA).
“This data shows just how rapidly a stock market can lose its popularity,” stated Joshua Raymond, director of XTB.
Raymond added: “It is particularly concerning that in an environment where very few companies are looking to go public we are seeing such a high proportion of companies fail to make the grade.”
With the IPO drought in full swing, the City of London Corporation has announced a US diplomatic mission with its first-ever US offices set to open in New York and Washington D.C., to be spearheaded by policy chairman Chris Hayward.
Pension fund investments collapse
London’s problems are compounded by low levels of investment from the UK’s vast pension funds.
According to data from the Office of National Statistics (ONS), pension funds held £91.3 billion in UK-quoted shares, or 5.1% of the market, in 2010. In 2022, they held less than £16 billion, just 0.7%, of UK-quoted shares.
Pension funds allocated more than 50% of their portfolios to UK equities in the 1990s; that figure is less than 2% today, with funds preferring lower-risk fixed-income securities.